Does Demoting an Employee Equal Constructive Dismissal?

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The British Columbia Supreme Court’s decision of Meyers v. Chevron Canada Limited, 2013 BCSC 420, demonstrates the uncertainty that can arise when predicting whether the conduct of an employer amounts to constructive dismissal of an employee.  This recent decision suggests that the demotion of an employee does not necessarily lead to a finding of constructive dismissal.

The Meyers Decision

The case involved Mr. Meyers, who had been employed by Chevron Canada Limited (“Chevron”) for approximately 15 years when he was offered a new position as part of the company’s reorganization.  Prior to the reorganization, Mr. Meyers held the position of Applications Development Team Lead within the information technology (IT) department.  In this role, Mr. Meyers had up to five employees and three contractors reporting to him directly.

Chevron offered Mr. Meyers a new job in the IT department as a Business Analyst.  This position offered the same salary, benefit package, and reward programs as Mr. Meyers’ previous position.  However, Mr. Meyers would no longer have employees reporting to him and he would no longer be responsible for their performance reviews.  The people who had formerly reported to Mr. Meyers would now be his equals.  His individual office would be replaced with a cubicle.

Mr. Meyers took the position that he had been demoted, as the Business Analyst position was essentially his former position, but without the supervisory responsibilities.  He declined to accept the new position and brought an action alleging constructive dismissal.

Constructive dismissal is established if an employer makes fundamental and unilateral changes to a contract of employment which are not specifically permitted by the contract.  That is, the Court must consider whether there has been a breach of an express or implied term, and if there has been a breach, whether it is fundamental to the contract such that the contract has been repudiated.

The Court acknowledged that there was some diminishment in Mr. Meyers’s responsibilities.  However, Mr. Meyers’s employment contract did not have an implied term which precluded Chevron from altering the scope of Mr. Meyers’s management responsibilities.  Mr. Meyers had changed his job with Chevron a number of times.  His role was not rigidly defined and the supervisory nature of his role had diminished over time.  Even if such an implied term existed, its breach would not be fundamental to the employment contract.  The new position offered to Mr. Meyers was not a “dramatic qualitative change” in his duties, and in fact many of his duties remained unchanged.

The court ruled that the new position constituted a lateral move and thus dismissed Mr. Meyers’s claim for constructive dismissal.

Implications for Employees and Employers

While every constructive dismissal case is driven by its unique facts, the decision of Meyers v. Chevron Canada Limited is of interest to both employees and employers.  It demonstrates that it is not always obvious when employer conduct will constitute constructive dismissal.  Employees should be cautious before taking the position that they have been constructively dismissed, even if their new position is perceived as a demotion.  As for employers, greater latitude may be available when restructuring the affairs of their operation.  It appears to be permissible to reduce an employee’s level of responsibility, to some degree, so long as the remuneration remains the same and the employee’s duties have not fundamentally changed.